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Subject:  Re: Gang of Five China auditors charged Date:  12/5/2012  12:28 PM
Author:  TMFCogitarius Number:  5142 of 5166

Looks like Canada's way ahead of the US on this issue:

'Separately, in Canada, Ernst & Young agreed to pay $117.8 million to settle separate shareholder allegations that it misled investors of Sino-Forest Corp., a timber company that filed for bankruptcy protection this year amid questions about its disclosures. The settlement disclosed Monday was the largest ever by an auditor in Canadian history, a plaintiff's attorney said. Ernst & Young didn't admit wrongdoing in the settlement, which must still be approved by the bankruptcy court.

The Ontario Securities Commission alleges Ernst & Young didn't exercise enough skepticism in verifying the ownership and major assets of Sino-Forest. According to the commission, for instance, one Ernst & Young auditor in its Canadian affiliate acknowledged in an email to another auditor that the firm had no way of knowing that the trees the audit firm was inspecting were actually owned by Sino-Forest: "I believe they could show us trees anywhere and we would not know the difference." In addition, the commission said, several of Ernst & Young's senior partners at the affiliate involved in auditing Sino-Forest couldn't read or speak Chinese.

Ernst & Young's Canadian affiliate said it was "confident" its Sino-Forest work had met all standards and that the firm "did extensive audit work to verify ownership and existence of Sino-Forest's timber assets."

Ernst & Young said its settlement with shareholders "is without admission of liability" and "will reduce the uncertainty and future burden on our business, and allow us to focus on our people and our clients." '
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